How to Conduct an Effective Performance Appraisal

How to Conduct a Performance Appraisal

Here are 5 tips a manager, supervisor, or HR professional can use to conduct an effective performance appraisal:

1. Prepare

   ensure you are well prepared by:

   • reviewing the notes from the employee’s previous appraisals – You can start by getting a “snapshot” of the employee’s general status and progress by reviewing their last appraisal before comparing it to their more recent works
   • reviewing their more recent works – Most employee evaluations are scheduled on an annual or biannual basis, which means their recent works and activity have not been reviewed. Review an employee’s recent works and compare them to
   • providing live feedback – Provide on-the-spot positive, and negative feedback instead of waiting for the scheduled appraisal. This shows the employee that you are actually paying attention to their work which will encourage them to be more open and honest during your actual appraisal

2. Make it conversational

   Having a conversation instead of “lecturing” an employee during a performance appraisal is important because employees are compelled to be open and honest when they feel that they are listened to. Involving the employee in the process encourages engagement and a better understanding of the purpose of the performance appraisal.

3. Customize action plans

   Action plans must be customized according to each employee’s strengths, weaknesses, target metrics, and personal goals as a member of the organization to be effective. A good action plan must be logical, doable, and directly linked to goals.

4. Set effective and realistic goals

   An effective and realistic goal should be aligned with the company’s objective, have a time-frame for completion, and an expected output. Employees are more enthusiastic and work harder to meet their individual goals when they understand how it impacts the company’s broader success. Factors such as the nature of the task, the employee’s capabilities, and the tools and support provided such as training and supervisor assistance should all be considered when setting effective and realistic goals.

5. Proper documentation

   Properly documenting what was discussed during a performance appraisal is essential for practical and procedural purposes. Proper documentation provides you with easy access to employee appraisals should you need to access them. It’s also a common requirement to have employees sign their performance appraisal form as acknowledgement. Using a performance appraisal form can help streamline your performance appraisal process.

Purpose of Performance Appraisal

Performance appraisals are important for organizations to reduce uncertainty and help employees align with company goals. They are typically conducted every quarter or annually to assess whether employees are on track with company goals and whether they are meeting their targets. A clear understanding of appraisal goals makes the review process more effective and produces a positive outcome for both employee and the company.

Appraisals also consider skills, competencies, and overall productivity. Managers use appraisal forms to compare past reviews, track progress, and provide feedback. This process helps employees understand their strengths and areas for improvement, and open a discussion on how employees can foster growth in their role. 

Key objectives of performance appraisals include:

1. Setting Realistic Goals – Managers should set achievable goals based on employees’ past performance. For new hires, using benchmarks from other employees can help guide expectations.
2. Identifying Problem Areas – Sometimes, employees may struggle with certain tasks. Ideally, using a KPI can help identify these areas and also set expectations. Before giving low ratings, managers should ensure workloads and instructions are clear. Open discussions can help address challenges.
3. Supporting Employee Growth – Appraisals should encourage teamwork, not competition. Managers should help employees reach their targets with proper evaluations, benefiting both individual and team performance. 
4. Motivating Employees – The feedback from appraisals should motivate employees to improve and perform better in their roles.
5. Improving Efficiency and Productivity – One key result of performance appraisals should be increased work efficiency, this will talk about how employees can accomplish tasks in a timely manner. This also talks about whether the employee is properly equipped with the right tools to work.

Appraisal outcomes can be divided into personal and professional aspects.

Personal Aspect – Employees become more aware of their strengths and weaknesses. They may also identify personal issues that affect their performance. Addressing these can lead to both personal and professional improvement of the employee. Organizations should consider offering support programs for employees facing mental health or stress-related challenges.

Professional Aspect – Appraisals help employees improve and guide them toward career growth. Positive outcomes include promotions or salary increases. The process fosters open communication, allowing employees to voice concerns, which managers can address to improve work conditions.

5 Stages of the Performance Management Cycle

The process for employee appraisals is based on the performance management cycle. Performance management involves more than just getting performance ratings of employees. It follows five stages that direct the entire course of the employee review from start to finish. 

Planning

Planning is the first step of performance management. In this stage, supervisors are assigned to set performance indicators and goals to include in the appraisal meeting and forms. This enables better understanding of why, what, and how the appraisal will be done. Employees should be involved as they know their own capabilities. The employees can also talk about tasks and skills they want to be included in the evaluation process. The supervisor can discuss the company’s current performance, situation, and goals.

Monitoring

This stage is where supervisors monitor progress and manage the performance of employees. After setting their KPI’s and goals, the supervisor should make sure that their subordinates are on track and give continuous feedback all throughout. This is an opportunity to steadily work on improving employee performance. The monitoring stage also allows supervisors to identify and resolve any issues early on.

Developing

This stage is used for additional training and development of the employee and is meant to nurture and help the employee improve their performance. The supervisor can advise the employee to take on other tasks and responsibilities that they can learn new skills from. The development efforts will help the employee keep up with the changes in the company and industry. 

Rating

This is a critical stage. Some employees may feel apprehensive and anxious during this process for fear of getting a low rating. The previous stages of the appraisal process, however, should have prepared the employee if they were implemented correctly. The supervisor decides on the rating objectively based on the KPI’s and goals of the employee. Supervisors are required to adhere to the company’s procedure on performance rating.

Rewarding

The last stage of the appraisal cycle is providing employees with their just rewards or incentives. Deserving employees should be acknowledged and given merit, certificates, gifts, or monetary rewards. This stage of the appraisal process is when managers decide to give the employee a higher salary or promotion due to their performance. This is a tangible and sincere “thank you” for the employee’s contributions to the company. Providing recognition and incentives boosts employees’ morale and motivates them to do better.